Alert iPhone users: Prices won't go up anytime soon due to this reason amid new tariffs; check details

Apple Inc. has managed to avoid immediate increases in the retail prices of its products in the US, despite the implementation of new tariffs by the Trump administration. This was achieved through strategic measures. A Times of India report quoting a source stated that the company had already shipped an "unusually high" number of devices from its factories located in India and China, allowing it to build up inventory during a "relatively lean period." This proactive approach has temporarily shielded Apple from the impact of the higher tariffs, which are set to come into effect shortly. 

The tech giant's warehouses in the United States are now "sufficiently stocked up for the next few months," with shipments from major manufacturing hubs moving at a "frenetic pace" to beat the April 5 commencement of a 10% baseline tariff. 

Additional reciprocal tariffs, which vary by country, are scheduled to begin on April 9. The US remains one of Apple's largest markets, and there is concern that transferring the full cost burden to customers might lead to a reduction in demand and pressure on profit margins.

According to a report from Reuters on Friday, concerns about a global trade war have been ignited by Donald Trump's implementation of reciprocal tariffs. These tariffs have the potential to result in significant price hikes for various products, including Apple's iPhones. Reuters noted that with the tariffs now in place, projections from Rosenblatt Securities estimate that the cost of a top-of-the-line iPhone could reach nearly $2,300 if Apple chooses to pass the additional costs on to consumers.

Apple's prudent approach in stockpiling products and strategically planning its global production may allow it to maintain competitive pricing in the short term. However, its long-term strategy will likely need to adapt to the evolving trade environment and tariff structures. 

While Apple's current stockpile helps mitigate immediate pricing impacts, the company has acknowledged that "any price hike to offset this impact cannot be limited to just the US market, but will have to be taken across key global regions, including India." Such decisions will be made after a comprehensive assessment of supply chains and manufacturing locations, considering the stipulated tariffs for each country. The idea is to balance production across various regions to cushion shipments into the high-tax US market. 

The trade war initiated by Donald Trump, also known as the Liberation Day tariff war, has resulted in a significant decrease in the market value of publicly traded companies, amounting to trillions of dollars. Border taxes reaching up to 50% are expected to have a detrimental impact on businesses worldwide.

Prominent US-based companies such as Nike and Apple have experienced substantial declines in their stock prices and market capitalization. This is primarily attributed to concerns among investors regarding potential price hikes and a potential decrease in consumer spending.

Is it advantage India?

The current situation could also potentially lead to an increased role for India in Apple's global smartphone production, as tariffs under President Trump could make India a more attractive manufacturing hub. Apple, which already plays a significant role in India's smartphone exports to the US, may see increased production there, given the lower reciprocal tariffs of 26% compared to China's 54%. Any final decisions will depend on the outcomes of US negotiations with individual countries regarding their tariff rates. 

Apple has moved a portion of its iPhone production to India, with plans to increase this to 25 per cent by 2025. Analysts project that India could account for 15–20 per cent of total iPhone production by the end of 2025. This shift is part of Apple's broader strategy to reduce reliance on China due to geopolitical tensions and increasing tariffs.

Although Apple has not officially commented on the tariff policy, its stock experienced an 8 per cent drop after the announcement, marking the worst single-day performance since 2020. Current estimates suggest that 10-15 per cent of iPhones are assembled in India. However, the tariffs could create challenges for Apple's cost and pricing strategies.

With a 54 per cent import duty on products from China, India is seen as a more favorable alternative for Apple at present.